- Government must begin to obtain more revenue from the small-scale sub-sector
Large-scale mining has over the years been a major contributor to Ghana’s economic growth as it has directly and remotely provided the needed impetus to boost the country’s socio-economic transformation drive. The mining industry continued its buoyant performance in 2019 providing a whopping GH¢4.01 billion to local revenue generation by the Ghana Revenue Authority. The amount represented a 69.9 per cent increase from the 2018 figure, which stood at GH¢2.36 billion.
Addressing stakeholders at its 92nd Annual General Meeting held online, the President of the Chamber, Mr. Eric Asubonteng, indicated that: “This growth was occasioned by the simultaneous increase in production and price of some minerals, particularly, gold. Likewise, the expiration of the Stability Agreements between the Government of Ghana and some mining companies further resulted in changes that boosted revenue for the State.”
A breakdown of some of the taxes the state received from mining included:
- Corporate tax =GH¢ 2.27 billion
- Income tax (Pay As You Earn) =GH¢ 736.26 million
- Mineral royalty =GH¢ 1.01 billion
- Other taxes stood at GH¢ 0.67 million
He stated that in-spite of the increase in revenue generated by the state, total gold production, which is the pre-eminent mineral mined in Ghana, dropped from 4.792 million ounces in 2018 to 4.577 million ounces in 2019. A situation the Chamber attributed to the reduction in the purchases of dore from small scale producers by the statutorily mandated Precious Minerals Marketing Company (PMMC). Manganese and bauxite production also increased by 18 per cent and 10 per cent respectively.
Mining
“Regrettably, purchases of diamonds by PMMC fell from 0.057 million carats in 2018 to 0.033 million carats in 2019 due to a 41 per cent fall in production. The persistent decline in purchases of diamonds largely reflects low recoveries from small-scale winners and the continued shut down of the only large-scale producer of diamonds in Ghana,” Mr. Asubonteng lamented.
Data from the GRA analysed by Cedidollar show that large scale mineral producers contribute over 90 per cent of the revenue obtained from minerals in Ghana perennially. This goes to raise critical questions about the contribution of small-scale mining to national development. While it is obvious that small scale producers contribute higher numbers of informal jobs in the minerals sector, there is an urgent need to reform the sub-sector for government to rake in more revenue from operators to develop the nation.
Statistics in the Chamber of Mines’ 2019 Annual Report demonstrate that the biggest licenced gold buyers purchased more than what one large scale mine produced in a year. Unfortunately, these companies do not contribute a fraction of what these large-scale producers are expected to pay annually. For instance, data from the PMMC show that Monex Mining Company Ltd, an LGEC assayed 238,933 ounces – much more than the output of a company such as Golden Star Resources, which has two large-scale mines. An effective approach to raising revenue from a formalised small-scale subsector would also inure to the benefit of regulators who can begin to receive appreciable resources to support their efforts against illegal mining which has surged amidst the Covid-19 global pandemic.
An address by the Chief Executive Officer, Mr. Sulemanu Koney, contained in the Annual Report commends industry regulators for supporting the efforts of responsible mining operators in the country. He averred that through the activities of the Chamber, a number of socially relevant activities had been implemented to support national development.
“As the world confronts the Covid-19 pandemic, we will endeavour to leverage key partnerships within and without the industry in order to surmount the adverse effects of this scourge on our country and our industry,” he assured.
He affirmed the Chamber’s goal to demonstrate how mining can positively impact national development with the right framework and partnerships in place and used the opportunity to urge the Board and Management of the of the Minerals Development Fund Secretariat to accelerate the level of development in “…mining communities to support livelihoods and the local economies.”
